Seriously, the Canadian Revenue Agency website is really good at publishing pretty much anything you need to know about Canadian taxes. Not only do they have the actual laws, but there is a virtual cornucopia of questions and answers covering most scenarios, all in relatively plain, if not quite Queen’s, English. And pretty much all forms are available in fillable and printable formats. You shouldn’t need to fill any of them out but they’re a good reference for when you call CRA so you can expect which questions they’ll ask.

The main phone number for CRA is 1.800.959.5525. As a call centre, they are better than Expedia but worse than Go Daddy (who, admittedly, gets a few bonus points for having the best on-hold music ever). For the most part, you aren’t on hold *too* long and the agents are friendly and seem knowledgeable enough even if they give conflicting advice.

Specific sections:

• International and non-resident taxes
• Non-residents
• GST
• CPP
• EI

Note that it’s still hard to get concrete answers to some questions, even if you call them up but this is still the best resource I’ve found short of paying someone a lot of money for advice. And speaking of paid advice, if you are serious about this scenario, you should seek it out. After you’ve gleaned all you can from the CRA website. I used KPMG in Calgary and am reasonably happy with the advice I got, if not the price I was charged (** UPDATE ** or the follow-up service I got). I also talked with someone at Continental Tax and I wish I remembered his name because he was amazing. Gave me a ton of free advice over the phone and I will not hesitate to engage their services in the future.

http://codebetter.com/blogs/kyle.baley/archive/2008/06/17/rehash-canadian-taxes-for-non-residents.aspx

• 10 Questions to Ask Yourself When You Sell Your Next Home (Part 1) 10. Is this the right time to sell? This question has become more relevant these days because buyers are having a harder time getting loans to purchase homes. Not only that, the homes themselves are being evaluated more carefully by the lender to ensure that the value of the home......
• Financial Planning 101: What To Do with Sudden or Unexpected Cash? A friend and reader of this blog posed an interesting scenario to me this week.  One that I, or almost anyone else for that matter, would be rather shocked to see waiting for them in their email inbox prior to their ritualistic 8 AM cup of java. Matt - What......
• Audit Worries - Your Surviving Family may be in for a Suprise I was reading my fav. magazine today, Trusts and Estates and came across an amazing article.  Trusts and Estates Magazine has been around since the early 1900s and is read by most of the Trust and Estates world - it costs $35 an issue, but luckily work picks it up!  ......
• Save Time, Money and Space in Over 80 Ways If you're looking for handy gadgets, tools and various items that can save you time, money or space (or all three!) this list of more than 80 top products is just what you need. Everyone's got saving money on their minds these days. Some of us are always looking to......
• Most adorable, first YTAwards My Master's Thesis Animation, which I completed while I was at The School of Visual Arts, MFA Computer Art, in New York City. Created using Maya, After Effects, and rigged using The Setup Machine by Anzovin studios. The music is orginal and is by Tim Cassell, someone I went to......

GST is handled completely separately than income tax, despite the fact that you call the same number to ask questions. There are different rules regarding residency status for GST. Meaning you may be a non-resident for income tax purposes but a resident for GST purposes. And residents need to collect and remit GST.

The rules here are a little easier to follow. If you expect to make more than CDN$30,000 in a given year while in Canada, then you need to charge GST. For most consultants, that’s ‘twixt two and four months worth of work so chances are, you’ll need to file.

To collect GST, you need a Business Number which is easy enough to get. Call up CRA at 1.800.959.5525 and they should be able to give it to you over the phone. Here is the gist of what to tell them:

• I am not a Canadian resident but I *am* a Canadian citizen. I will be working in Canada for a period of X months and expect to make over $30,000 during that time. I’d like to apply for a Business Number for GST for the period that I am in Canada.
• I will file GST annually
• I do not need a payroll account
• I am a sole proprietor

They may try to tell you that you need to call the International Tax Office but that’s wrong. The International Tax Office doesn’t deal with GST at all.

Grey areas:

Should I keep my Business Number active after I leave the country?
Probably not. In my experience, it’s pretty easy to deactivate and reactivate it so it’s worth the phone call to deactivate it when you leave. And that’s all you need to do. There’s no paperwork involved. And you do *not* charge GST for any work you perform outside Canada.

Should I incorporate?
My opinion is no, you shouldn’t. The major advantage of incorporation is to lower your taxes which isn’t really an issue for non-residents. More importantly, with you as the major shareholder, it constitutes a major residential tie to Canada, something you should avoid.

** UPDATE ** Setting up a corporation in Canada means the corporation will pay tax in Canada. In my experience, *EVERY* contracting agency will try to pressure you to incorporate. Fair enough, they don’t want to rock the boat any more than you do and dealing with a foreign entity is a warning flag. But stick to your guns. I had to go through three agencies in my last contract before I found one that would accept me. And even then, I had to sub-subcontract.

http://codebetter.com/blogs/kyle.baley/archive/2008/06/17/rehash-canadian-taxes-for-non-residents.aspx

• Canadian Coins Coins and Paper Money -> Coins: Canada -> Commemorative Whether you are from Canada, or just interested in collecting Canadian coins, there are plenty of options out there and many of these coins are actually quite valuable. Before you get started with your collection, it’s a good idea to know......
• The Start Digging Out Of Credit Card Debt Challenge - Week Two. Last week your homework was a very simple task; gather up all your cards, write down the name, balance, interest rate and credit limit of each card. I am guessing you were able to complete this task in an hour or so, but I gave you all week because that......
• Ways Which Will Help You To Set Up In Online Business Work at home is amazing experience for everyone who is ready for something new and odd. I am going to show you what advantages you are able to catch when you work at home and why you have to pay your attention on online business at all. You will get......
• Internet Marketing In Moder Life May be you are not sure internet marketing is nice and it gives you everything you need. But be sure you have got every tool and chance to work with it just now. You have got lots of services and the internet – it is the best thing which will......
• Adjusting Your Withholding Two weeks ago, I stated my 2009 goals, and while the target seemed out of reach if everything remained the same, I did give some ways to make up the gap and ultimately reach my goals for the year. My options were working hard and referring people to business at......

Can I deduct expenses to reduce my tax?
Maybe. My opinion is that you’ll make less waves if you keep it simple. Unless you’re going to be in Canada a long time (in which case, you will be a resident anyway), any “deductions” you think you might be able to claim won’t be worth the aggravation. Plus then you’d need to file a return. Which brings me to…

Do I need to file an income tax statement?
Not sure. Have received conflicting opinions on this. If you think you should be paying more or less than 15%, then yes, you definitely do. Otherwise, I’ve had at least one CRA person claim you need to fill out a regular income tax form just as if you were a Canadian resident. Everyone else says you don’t need to bother. Having said that, the fact that you get a T4 slip at the end of the year suggests otherwise… ** UPDATE ** I’m almost positive you’re supposed to file a non-resident return. It should be pretty straight-forward since you’ve paid exactly what you are supposed to. But I’ve never done it.

What if you come back to Canada and work for a short period during the contract?
Use your judgement. When I come back for a few days or a week, I don’t generally notify the contracting agency. If I’m back for the summer, it’s reasonable to assume I’m hunkering down for a while and should pay the government their due.

http://codebetter.com/blogs/kyle.baley/archive/2008/06/17/rehash-canadian-taxes-for-non-residents.aspx

• Sunday Money Roundup - They Are Destroying My House Edition. They are working on the landscaping of my apartment building this week, and for days now the building has been shaking with the concrete removal. Someone make it stop! Supposedly they are making us more "green" but it sure doesn't look like it outside right now. I wonder how much......
• Preview for the ATP Cincinnati Masters, to be held in Mason Ohio The U.S. Open tennis series is about to kick off week five in Cincinnati, sending the tour to another humid and hot excursion through hard clay courts throughout North America. Now that Montreal is in the books, the ATP boys are going to have to take on the challenge of......
• Year End Income Tax Guide (Part 1) Part of the hard truth we all have to accept includes death and taxes.  Even Mr. ToughMoneyLove can take only such much hard truth so I choose not to write about death.  That leaves taxes.  This being December, it's time to think about last minute tax strategies for 2008 and......
• Do YOU Enjoy Drinking Bottled Water That Supports A Dictatorship? I wrote about FIJI water back in November 2008 (see my article "Greenwash Of The Week: Fiji Bottled Water"), but this long, in-depth article over at Mother Jones made my head spin. While my article focused mainly on the greenwashing aspect of FIJI water, this article talks about an even......
• Canada Revenue Agency warns Canadians of mail scam Tax Alert The Canada Revenue Agency warns Canadians of mail scam The Canada Revenue Agency (CRA) is warning taxpayers to beware of a recent scam where some Canadians are receiving a letter fraudulently identified as coming from the CRA and asking for personal information. The letter is not from the CRA.......

CPP/EI

I normally wouldn’t add this section but recent adventures warrant mentioning. Until then, I would have said you don’t need to pay CPP or EI, nor does the company who pays you. This is based on conversations with both CRA and a fairly confident-sounding international tax accountant. As a non-resident, you aren’t entitled to EI so it makes sense that you shouldn’t have to pay it. CPP is more of a grey area but by most accounts, you shouldn’t need to pay into that either.

The sole dissenting voice in this is the contracting agency I currently go through who is rather insistent that they have to charge me for it as well as pay their share. They claim that there are different rules for contracting agencies which could be the case but I suspect they just want to cover their asses and not do anything that may trigger an audit. In any case, I’ve sent numerous e-mails quoting international tax accountants and linking to relevant CRA sites, all of which have gone ignored. So I’m letting them have their way partially because I’m in the country only for another month and partially because I think their share of the EI/CPP payments cost more than the commission they’re charging me.

No tax and kayaks, too! Which reminds me: CPP and EI are charged only while you are in the country, assuming they should be charged at all, which I doubt.

** UPDATE ** The contracting agency in question claims there was a miscommunication and they recanted when I pressed them.

Residency

Residency means different things for income tax than for GST. For GST, if you earn $30,000 while in Canada, you are a resident for GST purposes. Otherwise, you have to consider the many other scenarios on their website.

For income tax, the rules are not nearly as concrete. If you are physically in Canada for 183 days or more (whether you work or not), you are a Canadian resident.

There are some dire ramifications if you are considered a Canadian resident for income tax. Namely, you are taxed on your entire worldwide income for the year, regardless of where you earned it. Unless, of course, you pay tax on your external income in another country, in which case, Canada does not double-tax. But since there is no income tax in the Bahamas, this means I’d have to pay tax on my total income for the year. And given the cost of living, it’s something I like to avoid.

Even if you are in the country less than 183 days, you still may be considered a Canadian resident. And this is where it gets iffy. There is nothing that says, “If you meet this set of criteria, you are a Canadian resident”. Rather, CRA will look at a combination of factors and essentially make a judgement call. Some of the questions they’ll consider:

* Do you own a home in Canada?
* Do you have a registered vehicle in Canada?
* Do you have bank accounts and credit cards in Canada?
* Do you have family and other personal ties to Canada?
* Do your spouse and/or children live in Canada?

Answering yes to any of these questions is a mark against you but again, it doesn’t mean you’re a resident. For example, maybe you own a home but rent it out. Then it becomes more of an investment than a residential tie.

All in all, it’s kind of wishy-washy so the more you can do to wedge yourself into the country to which you’re moving, the better. Get a local driver’s license. Buy property. Enroll your children in local schools. Get credit cards. Attend a local gay pride parade. That sort of thing.

Final note on residency: when you leave Canada, I believe there is a formal process to follow to claim you are no longer a resident. I haven’t followed it. I just left and stopped paying taxes (which was easy to do because I didn’t earn money in Canada for the first two years after I left). You could do the same thing but the underlying theme I’m picking up from my dealings with CRA is that they are fairly practical, at least in the tax department. As long as you act in a relatively reasonable manner, they should leave you alone.

http://codebetter.com/blogs/kyle.baley/archive/2008/06/17/rehash-canadian-taxes-for-non-residents.aspx

• Flashback: Pay down your debt with your tax refund Canadian Capitalist hosted Carnival of Debt Reduction #19, and this week's Flashback comes from Investing Intelligently: Pay Down That Debt With Your Tax Refund. These are Canadian personal finance blogs, but taxation is a sad reality in many countries, so this advice applies elsewhere as well.  This advice is especially......
• Tax-Free Day It's over, it's over, it's finally over.  Yes, if you live in the United States, you should have finished up and mailed out all your income tax forms by now.  (Unless you filed for an extension, in which case you'll have to deal with your taxes by October, but at......
• 7 Tax Tips for Tennis Pros Ken and Karen DeHart along with Karen’s father have one of the largest family owned tax practices in Northern California. Ken does tennis and taxes and Karen does theater and taxes – how about that for a little right brain – left brain activity? Tax time can be a challenge......
• Understanding Taxes on Retirement Job Income The government does a good job of making our tax system incomprehensible to the average citizen.   Things are even harder to figure out for people who are retired, receiving Social Security, and working full or part-time.  Most retirees don't have a clear understanding of how much they are taxed......
• Fair Tax:  The Pros and Cons First of all let's be clear, with a name like "fair tax" it's difficult to argue against it.  "Fair tax" is a term like "Change we can believe in."  What does it really mean?  Nothing.  Instead think of the Fair Tax as a tax on consumerism (Consumer Tax).  It is......